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Mexican President proposes pension reform amid congressional challenges
President Lopez Obrador unveils a bold pension reform proposal in Mexico, aiming to secure retirees' income parity, but faces uphill challenges in Congress approval.
FILE PHOTO: Mexico's President Andres Manuel Lopez Obrador speaks during his daily press conference, in Acapulco, Mexico December 20, 2023. REUTERS/Daniel Becerril/File Photo
The president of Mexico revealed a new proposal for reform this week aimed at ensuring retirees receive an income equivalent to their earnings as active workers, a constitutional modification seen as challenging due to his party’s insufficient votes in Congress to secure approval.
President Andres Manuel Lopez Obrador’s MORENA party, along with its allies, successfully implemented one of the most significant changes to the country’s pension system in 2020, involving increased retirement benefits and reduced mandatory contribution periods for workers.
“We were able to enact a reform, but it remains incomplete. Hence, we are now poised to delve deeper into it,” stated Lopez Obrador, who expressed his intention to propose this initiative before concluding his term in office in October.
Since 1997, management of Mexico’s pension system has been in the hands of private fund administrators, known as “afores,” overseeing around 5.4 trillion pesos ($320 billion) as of October, approximately 20% of Mexico’s gross domestic product.
Lopez Obrador desires retirees to receive a substantial pension equivalent to their pre-retirement earnings, although he did not elaborate on the mechanisms to achieve this goal.
Amafore, the association representing Mexico’s afores, declined to provide comments.
Analysts state that the reform’s chances of becoming law are slim, describing the proposal as highly disruptive and unlikely to gain approval in Congress.
Lopez Obrador mentioned that the pension issue will be a top priority for his successor after the June 2 presidential election, where MORENA’s candidate, Claudia Sheinbaum, leads in polls.
The president also asserted his intention to present additional reforms before the end of his term, including an annual increase in the minimum wage above inflation and a reform of the judicial power. However, he acknowledged that MORENA and its allies lack the necessary votes to ensure the approval of these reforms.
